F&O: Nifty options band points to a wider trading bandwidth

The NSE benchmark Nifty fell for a third consecutive session on Monday, as it drifted towards the 10,700 level. The index formed a bearish candle on the daily scale and has been forming lower highs from the last three sessions.

It failed to surpass its supply trend line by connecting recent swing highs of 10,985, 10,923 and 10,870 levels. The index slipped below its 50-DEMA and closed near to its lower band of the last five sessions. Now it has to cross and hold above 10,750-10,777 zones to witness an upmove towards 10,880. On the downside, if it fails to hold the same then the index may drift towards 10,650-10,600 zone.

On the options front, maximum Put open interest was at 10,500, followed by 10,000 strike, while maximum Call OI was at 11,000 followed by 10,900 strike. Call writing was seen at 10,900 followed by 10,800 strike, while Put writing stood at 10,600 followed by 10,400 strike. Option band signifies a broader trading range between 10,600 and 10,900 levels.

India VIX moved up by 5.26 per cent to 16.15 level. Surge in VIX is putting pressure on the market and suggests limited upside.

Nifty Bank has been falling since the last three trading sessions and has corrected from 27,750 level to 27,180. It formed a Bearish Belt Hold candle on the daily scale, but r especting its previous week’s low levels. Now it has to cross and hold above 27,350 zone to witness an upmove towards 27,500 and then 27,750 levels, while major support exists at 27,000.

Nifty futures closed in the red with a loss of 0.52 per cent at 10,770. Built-up of long positions were seen in STAR, Apollo Hospitals, Kajaria Ceramics, Mindtree and DCB Bank, while shorts were seen in GAIL, Arvind, Exide Industries and Federal Bank.

(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)